The Oceti Wind Project aims to overcome financial, cultural and bureaucratic barriers to tribal renewable development.
Lyle Jack had long wondered how his Oglala Sioux community could take advantage of its location on the remote, windswept plains of South Dakota.
The tribal economic development manager dreamed of bringing wind energy development to the Pine Ridge Indian Reservation. Earlier this decade, he began sharing his vision with federal energy officials, wind investors and former politicians. Their advice: Go big. Offer a project over at least 500 megawatts.
Seven years later, Jack is chairman of the Oceti Sakowin Power Project, an alliance of tribes on the cusp of developing the largest ever clean energy project on Native American land. The first phase is an $800 million, 570 megawatt wind project that will be more than 10 times the size of the largest existing wind farm on tribal land.
By partnering with an experienced wind developer, Apex Clean Energy, and banding together with a unique governing model, the project backers hope to overcome the barriers that have conspired against other tribal energy projects and bring badly needed economic development do some of the nation’s poorest communities.
“All our tribes suffer from poverty because of our location and resources,” Jack said. “We know Oceti will create jobs in construction and maintenance of the wind farms. Revenue from the project will create even more opportunities later.”
A tragic history of tribal projects
A 2015 U.S. Government Accountability Office report concluded that poor management by the Bureau of Indian Affairs (BIA) has hindered energy development on tribal lands. “These shortcomings can increase costs and project development times, resulting in missed development opportunities, lost revenue, and jeopardized viability of projects,” it said.
The Rosebud Sioux Tribe, one of the Oceti project partners, sought a wind lease deal with the BIA in 2008 for a 30 megawatt project. In the 18 months it took for the federal bureau to respond, the tribe lost two power purchase agreements it had with local utilities. A decade later, the project remains unbuilt.
Auditors found the BIA lacks the data, staff, and skills to effectively manage energy development requests from tribes. The BIA’s weaknesses only serve to amplify other issues tribes face, from dealing with multiple jurisdictions and government agencies to inability to access tax credits.
A November 2016 paper published by Sandia National Laboratories examines challenges faced by the Navajo Nation, considered to have the greatest renewable energy resources of any tribe in the country. It concludes that the tribe lacked the legal and technical capacity to develop renewable energy. Intratribal suspicions and infighting hurt projects, along with a lack of a coherent energy vision for the future.
“Sometimes tribal politics and process become a barrier,” said Beth Soholt, executive director of Wind on the Wires, a nonprofit that advocates for wind and transmission development. The collaboration around the Oceti project, involving six regional tribes, is unique and could help smooth out problems, she said.
The Oceti difference
Jack and his collaborators believe they have what it takes to overcome the trail of failed renewable energy projects on tribal lands. In fact, each of the participating tribes had tried and failed at wind development, he said. That was the precipitating factor behind the creation of the Oceti Sakowin Power Authority (OSPA), which he chairs, to work with the tribes and developers. Five years ago, the tribes hired project manager Caroline Herron to run the agency; her husband, Jonathan Canis, serves as its general counsel.
Under the authority’s governing arrangement, each tribe has a vote, even though the size of memberships and their wind energy potential differs greatly. A third party will determine royalties the tribes receive on each of the projects, Herron said, and some money will be preserved to invest in future wind farms.
An elder’s council was also formed to ensure a broader viewpoint reflective of tribal values and history. “We wanted to make sure the element of culture was included in the decision making,” said Yankton Sioux Tribe elder council member Faith Spotted Eagle.
Oceti has had an impressive string of grants and business moves. With the help of the Bush Foundation the tribe held “summits” in Washington, D.C., and at Standing Rock in 2012 and 2013 to discuss how to jointly form a power authority and how to use bond financing. At a Clinton Global Initiative event in 2013, the former president lauded the project and shared the stage with Oceti leaders.
The Rockefeller Philanthropy Advisors stepped in become the fiscal sponsor and more grants followed. Government approvals and letters of support came from the U.S. Department of Energy, the White House and the Department of Interior; the tribes officially joined the power authority in 2015.
Partnering with a developer
None of this work would have mattered without a renewable energy partner. In August 2017, the OSPA board selected Apex Clean Energy as a partner on the project and formed 7G Renewable Energy to develop wind energy on tribal lands and split the profits. Apex Clean Energy agreed to give the power authority a 51 percent majority ownership while highlighting the potential societal benefit.
“Most of our projects have a great economic benefit, and a great environmental benefit, but this project has a potential for having a great social benefit as well,” said Apex business development vice president Eamon Perrel.
That need to improve the local economies of the six tribes — some with land masses larger than several states — cannot be underestimated. The project includes some of the nation’s poorest tribes and one of the most politically active, Standing Rock, which fought a celebrated battle against the Dakota Access Pipeline last year.
Apex will train residents to work on turbine construction, operations, maintenance and financial aspects of the industry, Perrel said. The goal is for tribal members to eventually run the wind farms, “but that doesn’t happen overnight,” he said.
The Dakotas collectively have been called the Saudi Arabia of wind and that certainly played a role in Apex’s decision to partner with the tribes. “If you look at wind map of the United States and circled the top regions the Dakotas would certainly be one of them,” Perrel noted. “It has some of the best wind in the country.”
While the agreement means the power authority will need to raise their own capital, they will retain more of the profits, Jack said. Most wind developers simply pay landowners lease fees and royalties based on energy generation, he said, and have no ownership in projects.
“We want to use our revenue to invest back into the wind farms, so we can retain more ownership and more control of our projects,” Jack said.
That leaves the burden of raising half the money on the tribes, certain to be a challenge considering they have no history of taking on anything this large or complex. Working with Apex, tribes are exploring ways to pay for their portion through development loans, bridge and tax equity financing. Apex wants the first project to be operating by 2021 to allow investors to get 80 percent of a federal production tax credit that begins declining that same year.
In addition to raising capital, the project will need to find buyers for the power. Apex received agreements to transmit electricity from the first two projects into the Southwest Power Pool, a regional transmission organization covering an area from the Dakotas south to northern Texas. The company has worked before in SPP’s territory, where wind represents 21 percent of its generation mix, Perrel said.
Attracting energy buyers
The tribes and Apex believe the first two projects — the 450 megawatt Ta’teh Topah wind farm on the Cheyenne River Indian Reservation and the 120 MW Pass Creek on Pine Ridge Reservation — are just the start. They want to generate gigawatts of wind power far into the future by exploiting the windy environment of the Great Plains.
Some entities will have to buy all those gigawatts of electricity. Herron anticipates utilities, electric cooperatives, corporations and other clients will be big buyers.
Some will do it because wind prices are so competitive now with coal and natural gas. Others will do it to reach renewable energy standards or in pursuit of corporate sustainability goals.
“Corporations have become large (clean) power purchasers and we offer the advantage of buying from a minority-owned business,” she said. “They can meet diversity goals they have for their supply chains… and find a lot of value in partnering with Indian tribes and bringing economic development to the area.”
The tribes see Oceti has a way to weave together the native philosophy of protection of the environment with the need for jobs and wind revenue to build a more economically secure future. Ryman LeBeau, a power authority board director for Cheyenne River Sioux Tribe, sees the project as “going back to living off the land, which brings us back to our core values.”
Eagle shares the sentiment. “I think that to us, as elders, we have recognition of powers of the world, and wind is one of the great powers of the earth,” Eagle said. “So, to us it makes all the sense in the world to do it in a way that doesn’t harm the environment and destroy the only earth we have. It makes sense to do it in a renewable manner.”
The dream of harnessing the region’s rich wind resource has been a more than a two-decade-long goal for Jack. “We’re going to give a template to other tribes to put their resources together and do projects like this,” Jack said. “We’re breaking ground for other tribes on how to come together and put your interests together and see what you can do. I think it’s about making history.”